Bullish IOF seeks to acquire 10pc of its units

The $1.6 billion
Investa Office Fund
has committed to a major on-market buyback with plans to acquire up to 10 per cent of its units.

The announcement of its intention to buy up to 272.9 million units pushed the office property trust’s unit price 5.26 per cent higher on a strong day for the sector. The lowly geared fund is seen as well positioned to undertake the earnings accretive move.

The trust has also refinanced its syndicated debt facility and has sold a smaller United States asset, Waltham Woods, in Massachusetts. The trust will fund the buyback partly with the proceeds from selling its offshore assets.

The Investa fund’s management believes the current unit price does not fully reflect the underlying value of the trust’s portfolio and considers a buyback an attractive capital management initiative to enhance value for unit holders.

Investa chief executive Scott MacDonald said the group was committed to the buyback, which, based on current unit prices, could be about $160 million. Such a figure would put the buyback at the higher end of those announced across the sector. The units closed at 60¢ each yesterday.

The group had flagged the move when it took over the management of the trust from ING Real Estate earlier this year but had to obtain board and lender consents.

However, not all the original 17 lenders in its corporate debt facility were supportive and the new, smaller group of financiers to a $552 million facility now backs the plan.

Mr MacDonald declined to identify which lenders had opposed the plan but noted that some offshore lenders had indicated they wanted to withdraw to their home markets.